There’s an interesting article over at Search Engine Land which discusses what Panamas new quality based algo means for searchers and advertisers alike.

Tim Mayer, Director of global web search at Yahoo says –

“The system is going to cause advertisers to work harder to make their listing more relevant, just as SEO’s have been doing in the algorithmic section for a long time”.

In theory, great news for agencies and experts alike then, but perhaps not great news for your average advertiser or business owner?.

Tim Mayer also gives some pointers about Pamanas new algo and what we should be looking out for –

…the algorithm analyzes both advertisement and landing page copy, in much the same way web pages are analyzed to determine their ranking in non-paid search results. At this point, more emphasis is being placed on ad copy than landing page copy, but landing page quality will become more important in the algorithm over time.

Yahoo is also looking at “advertiser information” and “advertiser industry segment,” but is saying little about what this really means. Mayer said that brand is an important factor here—when your search terms include a brand you’ll more often see an advertisement from the brand owner get top rankings.

And the reason behind the new quality based algo?

Well they are somewhat down on how much they get per search in comparison to Google. From the NY times

Citigroup Investment Research Director Mark Mahaney estimated that in 2006, Google made 4.5 cents to 5 cents on every search, while Yahoo generated only 2.5 cents to 3 cents a search.

In otherwords, Yahoo will now be able to use the same lack of transparency Google and MSN already do to increase the amount of money they receive per search under the guise of ‘improved quality of ads’.